Mobile handset makers lay off sales staff to save costs

The development comes at a time of the year when demand is typically low, experts said.

NEW DELHI: Several mobile handset makers have laid off thousands of in-shop promoters, or sales people, in multi-brand shops and slashed salaries of many others to cut costs in a bitterly-competitive market, industry insiders said.

Many notable brands including Lava, Intex, Micromax, Karbonn and even Chinese brands Oppo and Vivo have reduced the number of in-shop promoters — in some cases to nearly a third — over the past couple of months, they said.

"A lot of brands have been doing away with large number of promoters, because most don't have the money to sustain this,” said a senior executive at a Bengaluru-based mobile phone retail chain. “However, this trend is visible mostly in multibrand outlets,” the person told ET.

The development comes at a time of the year when demand is typically low, experts said.

A Delhi-based senior executive of a handset maker said that in one shop, the number of promoters has come down to five from 14.

In some cases, salaries of these promoters, which used to be at around Rs 18,000 a month, now stand reduced at around Rs 14,000, the person said. “Some of these salespeople have left the industry altogether,” he said.

While experts said the development has come at a time of the year when demand is typically low, some also pointed to increasing competition and pressure on margins.

“Competition has definitely impacted the Indian companies most in the past year or so, which is why they have been cutting their indirect workforce,” said Navkendar Singh, associate research director at International Data Corporation (IDC) India. “But some China-based companies also spread themselves too thin by going into small towns and multiple retail counters on each street, which they are scaling back now,” he said.

Singh said Oppo and Vivo had in-shop promoters in almost every outlet, but now in the face of immense competition in offline space from Xiaomi and Samsung “it is logical to do some correction and focus on a few high volume counters”.

Xiaomi and Samsung have emerged as the clear top two smartphone makers over the last couple of quarters, with the Chinese company outdoing the Korean major in the October-December quarter, leaving rivals such as Vivo, Oppo and the Indian brands behind.

Hari Om Rai, chairman, Lava International, blamed the direct and indirect discounting by ecommerce players for leading to the closure of several retail shops, which has affected jobs. The company has let go some 4,000 out of 11,000 employees for underperformance.

“Some of the online players are circumventing FDI rules by holding inventories and influencing the prices of electronic goods directly and indirectly, through various sub-companies,” Rai alleged.

“An immediate and stringent action to curb such economic terrorism is required, which can help save jobs and build a strong Indian economy and nation.”